By Paul Ploumis 03 Aug 2015 Last updated at 04:05:04 GMT
(Kitco News) - Retail investors continue to see no light at the end of the tunnel for gold as most remain bearish on prices next week, while market analysts have moved to the sidelines, according to the latest Kitco News Wall Street vs. Main Street Weekly Gold Survey.
Although gold prices are preparing to end in negative territory for the sixth consecutive week, some bargain hunting and short covering early Friday morning is helping to keep it off its lows and close near the $1,100-an-ounce mark. However, with July ending, analysts have pointed out that the gold market is ending its second consecutive month lower, the lowest monthly close since February 2010.
Although the number of bearish votes has fallen, from last week’s high of 75%, Kitco News’s weekly online survey still shows that the majority expect to see lower prices in the near-term. This week, 420 people participated in the survey; of those 285 people, or 68%, said they are bearish on gold next week; 108 participants, or 26%, are bullish and 27 people, or 6%, are neutral. This is the third consecutive week the majority of retail investors have been bearish on gold prices.
While the retail side remains pessimistic, there appears to be some quantified hope among market professionals that prices will build a base around the new lows. Out of 33 market experts contacted, 17 responded, of which four, or 24%, said they expect to see higher prices next week. At the same time, six professionals, or 35%, said they see lower prices, and seven people, or 41%, are neutral on gold. Market participants include bullion dealers, investment banks, futures traders and technical-chart analysts.
Most analysts contacted said the Federal Reserve’s bias to raise rates at some point this year will continue to support the U.S. dollar and hurt gold prices. The scenario that could create short-term movement in gold could be if next week’s data supports a lift off in September or December.
Darin Newsom, senior analyst at Telvent DTN, said that while the gold market is oversold on every technical indicator, but there is no urgency to buy at these prices, which is why he expects prices to start building a base. Newsom said that there is still a lot of uncertainty through the global economy that will continue to support gold but at these lower prices.
“I don’t know exactly where the bottom is going to be, but I think we are close to it,” he said.
Newsom also warned that the gold market could end up base-building for the next six months as investors retest the marketplace again.
John Weyer, director of commercial hedging at Walsh Trading, said that it appears the market is content to stay where it is until the economic data either supports or refutes a September rate hike.
George Gero, vice president and precious-metals strategist with RBC Capital Markets Global Futures, said that he sees gold stuck in this current range unless prices can close above $1,100.
Courtesy: Kitco News